If you’ve ever worked in the business-to-business (B2B) space, you may have heard about Level 3 processing. Level 3 processing helps lower your interchange rates and reduce overall processing fees. If your business accepts corporate, purchasing, or government credit cards, you can qualify for Level 3 processing rates.

Every time you process a credit card payment, your business is charged an interchange fee. The interchange fee is what credit card issuers (like Visa and MasterCard) charge for processing credit cards, and the fee varies depending on card type. Interchange fees make up between 70 and 90% of total fees paid by merchants to process credit cards. (Source)

When you process a credit card, you’re then placed into one of three processing categories: Level 1, Level 2, and Level 3. Level 1 has the highest rates and Level 3 has the lowest. As you move up levels, there are more line-item details that must be sent with each transaction.

If your business accepts corporate cards, purchasing cards, or government spending account (GSA) issued by Visa or MasterCard, you can qualify for Level 3 processing rates.

If a merchant wants to accept GSA cards, they must achieve Level 3 processing, since government entities, as well as some companies, require line-item details to appear on their bank statements.

Since corporate and government purchase cards are priced different than standard consumer credit card transactions, it’s important for your business to receive the best possible rate for these types of purchases.

Will Level 3 lower my processing rates?

Level 3 processing may seem like a lot of additional work, but your bank account will thank you for the extra effort.

Level 3 processing lowers costs for businesses that accept corporate cards, purchasing cards, or government spending accounts.

Since you’re providing so many line-item details at the point of sale, Visa and MasterCard view the transaction as less fraudulent, giving you access to exclusive Level 3 processing rates.

In fact, Level 3 provides the lowest payment processing fees and can save your business as much as 1.5% per transaction and up to 43% on your overall credit card processing fees.

Is Level 3 processing secure?

A PCI-compliant payment gateway (like EBizCharge) provides the most secure method for processing Level 3 transactions. EBizCharge uses data encryption and tokenization technology to lower your risk and make sure sensitive credit card data is always safe.

With a PCI-compliant payment gateway, Level 3 is typically more secure than other processing methods because it requires extra information in order to process the transactions. This additional level of security reduces potential fraud and chargebacks to your business.

Being PCI compliant is not legally required, but there are penalties for not following the standards. If you’re not PCI compliant and your site is compromised, you can face a hailstorm of penalties, fines, and costs ranging from a few thousand to a few hundred thousand dollars, including the loss of sales or customers, a damaged reputation, legal or regulatory fees, class action lawsuits, and more. In addition, your bank may end your relationship or raise the cost of transaction fees. The penalties incurred may vary and can be devasting for small businesses. It’s always best to maintain PCI compliant when processing Level 3 transactions to avoid expensive fines.

How do I get Level 3 processing rates?

Level 3 cannot be achieved using a physical terminal. In order to qualify for Level 3 processing rates, all line-item details must be securely passed through a PCI-compliant payment gateway that allows you to send line-item details for each transaction. If the data gets passed correctly and it’s the right type of credit card, then the bank will approve a Level 3 transaction. If a merchant misses even one of these details, they will not qualify for Level 3 processing.

Most accounting systems require businesses to enter line-item details manually, which makes gathering and applying this data a challenging and time-consuming process.

A PCI-compliant payment gateway takes invoice information and line-item details already stored in your system and automatically passes them to the point of sale. The gateway then uses these details to qualify your cards at reduced interchange rates and achieve the lowest payment processing fees for your business.

With a PCI-compliant payment gateway, your business can achieve Level 3 processing rates without having to do any additional work.